Australia’s South32 S32 said on Tuesday its Mozal aluminium smelter in Mozambique will be put under care and maintenance by March next year after the diversified miner failed to secure new electricity supply deal. This decision follows prolonged negotiations with Mozambique’s government and power suppliers, which have not resulted in an affordable power agreement necessary for the smelter’s continued operation beyond the expiration of the current power contract in March 2026. “The parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB,” said South32’s CEO, Graham Kerr, referring to the country’s flagship hydropower company Hidroeléctrica de Cahora Bassa.
The current power supply deal is due to expire by March 2026 and the company has not procured raw materials required to sustain operations beyond March, it said. South32 is expected to face a one-off cost of $60 million to place the smelter under care and maintenance. South32 Limited (ASX / LSE / JSE: S32; ADR: SOUHY) (South32)provides the following update regarding Mozal Aluminium (Mozal).
We have continued to engage with the Government of the Republic of Mozambique, Hidroeléctrica de Cahora Bassa (HCB), and Eskom to seek sufficient and affordable electricity supply for Mozal beyond March 2026, when the current agreement expires. Despite these efforts, a new electricity supply agreement has not been secured, and Mozal will be placed on care and maintenance on or around 15 March 2026. Accordingly, raw materials required to sustain operations beyond March 2026 have not been procured.
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South32 Chief Executive Officer, Graham Kerr, said:“Throughout our engagements, we emphasised that Mozal’s ability to continue operating depended on securing sufficient electricity at a price which allows the smelter to remain internationally competitive. “Unfortunately, the parties remained deadlocked on an appropriate electricity price, which was exacerbated by ongoing drought conditions affecting electricity supply from HCB. We must now turn our attention to safely placing the smelter on care and maintenance from March 2026.
“We understand today’s announcement is difficult for our team at Mozal, and we are focused on supporting them through this process. We also acknowledge the impact this will have on our suppliers, customers, communities, and other stakeholders, and we are engaging with them as we transition from operations to care and maintenance in the coming months.”
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